Group 1 operating income rises on higher new-vehicle sales

Higher new-vehicle sales and increased gross profits in all business segments drove Group 1 Automotive Inc.'s operating income higher during the first quarter of 2012, but net income dropped 4 percent.

Group 1 reported net income in the first quarter of $22.1 million, down from $23.1 million for the year-earlier period. But adjusted net income was $29.2 million in the quarter, a record for the period and a 27 percent increase from 2012. After-tax adjustments were largely for costs related to dealership acquisitions and hailstorm-related insurance deductibles.

Total revenue for the quarter increased 18 percent to $1.96 billion. Operating income was $58.6 million, up 9 percent.

"I am pleased with Group 1's first-quarter operating results, including significant revenue growth and solid expense leverage that delivered record first-quarter earnings," CEO Earl Hesterberg said in a prepared statement. "This is an exciting time for our company -- an unprecedented growth phase which should support strong returns for our shareholders over time."

Hesterberg noted that Group 1 acquired four dealerships in the United Kingdom and 18 in Brazil during the quarter. They add an estimated $827 million in annual revenues to the company. The retailer also said it sold a Nissan store in California during the period that generated trailing 12-month revenues of $35 million.